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After subtracting debt owed to shareholders of $17,115,350,
Mr. Kimball concluded that the fair market value of Belle
Fourche’s total equity on a marketable minority basis was
$13,654,361 on both June 4 and June 30, 1994.
Mr. Kimball calculated total equity on a minority basis even
though he was valuing a 68.47-percent interest as of June 4,
1994, because he found that the Belle Fourche buy-sell agreement
eliminated any premium for control that might otherwise have
attached to a block of stock representing voting control.
Relying on the opinion of a Wyoming attorney, Mr. Kimball
explained that a hypothetical purchaser (other than a current
stockholder) would not be recognized as a stockholder unless he
or she complied with the buy-sell agreement terms or gained
consent of the other stockholders. Mr. Kimball stated that a
hypothetical purchaser who was not recognized as a stockholder
would not have the right to vote, the right to distributions, or
any other rights against the company, unless he or she
successfully challenged enforcement of the buy-sell agreement in
court. For these reasons, Mr. Kimball concluded that a
hypothetical purchaser would not pay a premium for such
questionable control.
b. Initial and Final Lax Reports
The initial Lax report also used the guideline company
method and compared Belle Fourche’s financial results to those of
six pipeline companies (none of which operated gathering lines).
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